Interview with Carles Serradell, founder of Inveslar
They are the leaders of profitability, have returned more than 300,00 euros to their investors, Barcelona is their market and you can invest from 100 euros. Inveslar is all that is expected of a real estate Crowdfunding platform. Its CEO, Carles Serradell, sees on the horizon more Spanish cities where to implement the formula of collective financing of projects and even wants to go beyond the Pyrenees.
How was Inveslar born?
Before April 2015, we created a platform called thecrowdstates.com. The date is important because there was still no law 5/2015 of Promotion of Business Financing. At that time we were five partners, but two decided to leave to see that we had already developed the platform, but it lacked a payment entity because we did not have integrated Lemon Way and we worked with a commitment of capital increase. That system meant that we had to call all the investors who had opted for a Crowdfunding project to ask them if they still wanted to invest. There were many problems there because one was on vacation, another 'I will do it,' another would take off... At the end, two of the five partners preferred to retire with losses and close. The company still exists because we bought the assets of three of the five partners. However, the good thing was that we already had clients and a good database. That's when Inveslar was born. Our first operation was a modular construction that we already sold and that we did with the participant account model. It had a very good performance: a 25% IRR in the first operation, 12.5% in six months.
And why by means of Crowdfunding?
We had marketer for years and also made promotions with modular houses. We decided to show that Crowdfunding could run for sales and give good returns. Instead of winning 12.5% we, as promoters, give tickets with investors with minimum tickets of 3,000 euros. That's when 17 investors came in and it went well. We started another identical house that has already been sold as well, and a third one on the same street.
And you saw that your market was in Barcelona.
We decided to bet on Barcelona. In the first operation we lowered the ticket to 100 euros in Barcelona: a small but well located attic. At that time we already had the technology, in between we were doing a web integrating the platform of payments Lemon Way to have everything prepared and to be able to lower the ticket. As Rodrigo Niño from Prodigy says, 'as our administrative capacity increases and we automate, we can lower the tickets.' So it was. In our first project we had 17 investors, the second 11, the third 19, the next 68... Real estate promotion is more risky and rent is more savings. That's why we think it is more appropriate depending on what type of investor you are which promotion intended for sale are higher tickets, because you have to be an investor who is very clear what you play.
Let's go back in time, at what time did those five acquaintances come up with the first Spanish platform of Crowdfunding?
It started because I already invested with Crowdangel and with Crowdcube and it was August 2014 when I saw in The New York Times that they were talking about Crowdfunding in real estate. I downloaded the Harvard study of the Prodigy case and saw that there was no one in Spain. Yes there was a platform in France, very close to Costa Brava, and there we saw that there was an opportunity.
And you set up the first of Spain.
That's right, in 2015 Inveslar was born, then came Housers, Privalore... When we saw that there was no evil, we thought: 'Let's not go wrong'. We were scared with the CNMV issue. In fact, I even stopped a ticket sales partner because they did not want to risk having fines... When we saw the birth of Housers, we thought that they left with a lot of courage, they were not so afraid of regulation or jurisprudence.
Do you have any priority for any real estate project?
I would like the hotel sector where Spain is a power and you can build. I see a lot of potential because the big chains want to keep their business purely tourist and want to sell brick to be able to grow faster. In fact, one of the first operations that was done in Crowdfunding in the world was Hard Rock in Beverly Hills.
Do you intend to expand beyond Catalonia?
Yes we are now in Barcelona, but we also want to go to Bilbao, San Sebastian, Vigo, Santiago, Seville... All these cities where a real estate Crowdfunding operation has never been financed.
and want to internationalize?
Yes, we would like France, Italy and Portugal.
And the regulation?
Let us hope that the European passport will be approved.
Where do you see yourself in five years?
In several places in Spain and Europe. And also the idea is to have a secondary market, where the shares are liquid. Crowdfunding solves two major problems: access and that investors do not invest in an undivided. Here you buy shares in a company with which you already have a free transfer between partners, but we hope that they give us authorization not to have to go through the notary and to be able to separate the political, economic, and social rights. This would mean not having to pay a 34% in a transmission of a thousand euros that destroys any profitability.
Otherwise we will always be at a competitive disadvantage. Right now if I were French and would like to invest outside of France, I would prefer to invest in England than in Spain because if within three years curves come and I want to sell, at least I can do either with losses, with profits or at the same price. The Spanish market does not allow you to do that.
And what are your forecasts?
Profitability is failing because fixed income has channeled a lot of money towards real estate investments. It means that investors now study it when they pass a 4% annual return. We would be very happy if our clients had between 8% and 12% a year within three years. We believe that this is going to decrease especially in the big cities like Madrid, Barcelona, or Valencia. Right now we're at 17.38%.
Why do you have to choose an investor?
We have shown that of eight projects we have financed we have sold two, we have returned an average return of 18% of IRR. What we have for rent, we have everything rented. I invest in Crowdfunding myself because I have it more diversified and it gives me a better return than direct investing. In fact, I invest in mine and other platforms, both domestic and foreign.